Is the Data Center Shifting from the Hub to the Edge?

There's been plenty of talk about the vital importance of edge as it relates to new types of network configurations. We're anticipating plenty of new applications coming down the pike, from 5G to all things AI.

This was on Jon Hjembo's mind as he explored TeleGeography's take on the edge during our annual telecom workshop last month.

Fittingly, Jon looked back at one of TeleGeography's earliest reports for perspective on what a hub is and why it matters. From 2000's Hubs and Spokes, a TeleGeography Internet Reader: "As more bandwidth runs to the hub, economies of scope and scale make that hub a key destination for still more bandwidth, because everyone else is already there."

"As more bandwidth runs to the hub, economies of scope and scale make that hub a key destination for still more bandwidth, because everyone else is already there."

What this tells us about the importance of hubs is that there's a perpetual cycle of growth. Hubs build on themselves as network density, market transparency, economic activity, competitive pricing, and other factors join together to fuel ongoing growth.

That said, edge markets matter too.

Aside from the largest commercial hubs, there are numerous regional nodes with highly-concentrated, growing populations with tremendous demand for network connectivity. Some of these markets have merged to become hubs in their own right.

Beyond that, Jon underscored that edge markets matter because the closer you can get compute and storage to the end user, the better your service will be—a critical consideration when we talk about bandwidth-intensive application coming down the pike.

So are networks moving closer to the edge?

Looking at the colocation sector—and sampling both hub and edge markets—we find some that appear to be going through growth spurts (Milan, Prague) while others exhibit a flatter overall growth (Los Angeles, Mumbai). In the middle we find markets that are experiencing a more even, sustained growth (London, Dallas).

What we find is that edge networks always factor heavily into our growth trends. And they often factor heavily into the growth spurt category. You start with a lower base of capacity; when new retail colocation capacity comes online there's a massive injection in the market. Boom. Growth spurt.

Although sometimes you get more in that middle category of sustained growth. This typically means that an edge market is seeing more demand than is just sustained from that local market. This could be because a market is a great add/drop location on a much bigger route.

But by and large, in many cases with edge markets, after you have the first or second mover come in and install a new base of capacity, the long-term demand is met and growth tends to be much lower.

What does it all mean? What was Jon's dramatic conclusion? Click below to watch the whole presentation and find out.

Jon Hjembo

Jonathan Hjembo heads TeleGeography's data center research, focusing on both capacity development and pricing for key markets. He also specializes in research on international transport and internet capacity development, with a particular focus on Eastern Europe. He maintains the dataset for internetexchangemap.com and has increasingly worked with key members of the IX community in exploring the intersection of network, colocation, and peering.